Know your audience when it comes to pricing transparency

The first step for a homeowner interested in solar is usually a Google search to learn the basics, including how much it will cost. But it’s often difficult to find pricing information on residential solar installers’ websites. In many cases, it seems installers want customers to pick up the phone to get logistical information. But are consumers willing to take that step?

Online solar marketplaces like EnergySage shed more light on pricing information, and as a result, have become increasingly popular. Yet many installers are frustrated with these services, saying they yield large numbers of window shoppers and waste company time crafting quotes for people who won’t end up completing the transaction. In the right situations, sharing more pricing information up front could help solar installers close more deals and cut down on wasted time.

Customer acquisition remains a challenge for solar installers. In EnergySage’s “2017 Solar Installer Survey,” 37% of solar installer survey respondents said customer acquisition became more difficult in 2017, a 5% increase compared to 2016. I talked to three of our Top Solar Contractors to learn more about the business strategy around pricing transparency and how it impacts their solar sales.

Full disclosure

Icon Solar Power (No. 273 on the 2018 Top Solar Contractors list), based in Ohio, takes the most transparent route when it comes to solar pricing, but it didn’t start off that way. Zach Wieber, director of operations, said Icon Solar initially shied away from giving price information up front because it feared prospective customers wouldn’t see solar benefits past the price tag.

“By doing all that, and avoiding the price and avoiding the cost, our main goal was, ‘Let’s get the sales reps out there, let them talk to [the customers] so they can understand this better,’” Wieber said. “That actually held us back more than helping us sell our systems.”

Leaving pricing information out created a new problem—salespeople would drive to prospects’ homes to give presentations to people who thought solar was “free”—the strategy often used to sell leases and loans. Icon Solar sells all its systems to own, so “free” systems aren’t an option. Homeowners would be shocked when salespeople outlined the out-of-pocket system cost and often were in no position to buy.

So Icon Solar adjusted its strategy. It added an example cost breakdown online for homeowners to get a general idea of the investment needed for systems that offset 99% of electricity, 49% and 33%.

“We went to the other side of the fence there, instead of giving somebody no information, we want them to be as educated as they can so that they know that when we come out there, it’s not free. That there is an investment associated with doing solar,” Wieber said.

Wieber said the online estimates help to dismiss some of the misconceptions people have when considering solar, and this online transparency helps Icon Solar better target sales calls and sell more systems.

Keeping it covered

Sunny Energy (No. 157 on the 2018 Top Solar Contractors list) in Arizona has found it’s more effective for the company to keep the pricing conversation one-on-one rather than publishing that information online. Chris Wood, director of business development, has been in the solar industry for about 10 years, so he said he has a good idea of what sales tactics work or don’t work in his market.

“Customers are very curious and hungry for information about solar, but they really don’t have a very good grasp on the nuanced part of the business,” Wood said. “If you just post a price online, it tends to be a race to the bottom.”

Wood said customers usually don’t understand things like kilowatt hours or different technologies. He thinks if prices were listed on the site, the customer would likely just focus on numbers rather than other factors and benefits.

“I’m happy to share high-level general pricing with customers—give them a range—but to really dial it in, I like to have a conversation so I can explain the technology, the warranty, the company behind it, as opposed to just, ‘You’re buying a commodity and here’s the fixed price,'” Wood said.

Sunny Energy offers an online quote tool where customers can enter their home information including roof type, utility company and annual consumption, then receive a phone call from a Sunny Energy representative to get a quote.

“Of course, that quote is still subject to a physical site inspection of the property to make sure the roof, electrical system and shading considerations are all suitable for installing a PV system,” Wood said.

Wood said Sunny Energy is not the cheapest installer in the area, but it’s not the most expensive either. So the company emphasizes the value of its systems over price.

“I know some other companies that avoid the topic of price at all costs because they know they’re the most expensive in the market,” Wood said. “Obviously, I think that business model is flawed as well.”

Wood said Arizona has a mature solar market and most residents know someone who has a solar home. Because so many homeowners have solar, he thinks word of mouth and positive online reviews are more helpful in closing deals than pricing transparency.

Still figuring it out

Jeff Parr, president of Bay Area company Solar Technologies (No. 125 on the 2018 Top Solar Contractors list), said online solar marketplaces exist because the industry has done a poor job adapting to consumer needs. However, he also thinks adding solar to a home should not be much different from other large home improvement projects.

“From my perspective, I believe that we are glorified garage door installers on the residential side,” Parr said. “I mean, you don’t go online and get window quotes online without anybody being to your house. You don’t get a painter giving you a quote without going to your house.”

Still, Parr said there are always improvements to be made in solar sales.

“I would agree that the industry has been probably overly hesitant or reluctant or hasn’t spent the money necessary to build the tools to give customers the right information,” Parr said. “We care about doing a quality job. We don’t feel as though we can give customers a one-size-fits-all price and try and box them into a contract or an online tool without going out there to see them, to meet them, to see their home.”

Solar Technologies attempts to meet customers halfway with an online solar price calculator that requests their average monthly electric bill, roof type, amount of shade and more and then generates an estimate prior to any salesperson setting foot on the person’s property. Parr said they may build the tool out even further to give customers a more accurate picture of potential cost savings instantly. The company is testing customer conversion rates and has found so far that customer satisfaction is highest when salespeople call to discuss the generated quote.

“We are probably missing price-conscious consumers whose primary driver is cost per watt, but from experience, those customers tend to consume more resources, yield smaller systems and generate less profit,” Parr said.

For this reason, Parr said Solar Technologies will keep its primary focus on customers that value quality over low prices.

The industry appears split on how to balance satisfying consumer appetite for transparent pricing information with ensuring that price doesn’t overshadow all the benefits of going solar. By paying close attention to the buying patterns of consumers in an installer’s specific market, solar companies can zero-in on target audiences and adapt sales techniques and pricing strategies to fit each unique market.